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Improving Competition in the Non-Tradable Goods and Labour Markets: The Portuguese Case

Author

Listed:
  • Gabriela Castro
  • Ricardo Mourinho Félix
  • Vanda Almeida

Abstract

This study assesses the macroeconomic impacts of increasing competition in the non-tradable goods and labour markets in Portugal. We lean on evidence that the maintenance of low competition in these markets may have contributed to the recent poor performance of the Portuguese economy. The analysis is performed using PESSOA, a dynamic general equilibrium model for a small-open economy integrated in a monetary union, featuring Blanchard-Yaari households, a multi-sectoral production structure and a number of nominal and real rigidities. We conclude that measures aimed at increasing competition in the Portuguese non-tradable goods and labour markets could induce important international competitiveness gains and be valuable instruments in promoting necessary adjustments within the monetary union frame-work. However, in the short run, real interest rates are likely to increase temporarily, driving consumption and output temporarily downwards.

Suggested Citation

  • Gabriela Castro & Ricardo Mourinho Félix & Vanda Almeida, 2008. "Improving Competition in the Non-Tradable Goods and Labour Markets: The Portuguese Case," Working Papers w200816, Banco de Portugal, Economics and Research Department.
  • Handle: RePEc:ptu:wpaper:w200816
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    Cited by:

    1. Tim Schwarzmüller & Nikolai Stähler, 2013. "Reforming the labor market and improving competitiveness: an analysis for Spain using FiMod," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 4(4), pages 437-471, November.
    2. Vanda Almeida & Gabriela Castro & Ricardo Mourinho Félix & José R. Maria, 2013. "Fiscal Consolidation in a Small Euro-Area Economy," International Journal of Central Banking, International Journal of Central Banking, vol. 9(4), pages 1-38, December.
    3. Isabel Horta Correia, 2011. "Fiscal devaluation," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    4. Brian Micallef, 2013. "Measuring the effects of structural reforms in Malta: an analysis using the EAGLE model," CBM Working Papers WP/01/2013, Central Bank of Malta.
    5. Ricardo Marto, 2014. "Assessing the Impacts of Non-Ricardian Households in an Estimated New Keynesian DSGE Model," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 150(IV), pages 353-398, December.
    6. Gabriela Castro & José R. Maria & Paulo Júlio & Ricardo Mourinho Félix, 2015. "Financial Fragmentation Shocks," Working Papers w201508, Banco de Portugal, Economics and Research Department.
    7. Carlos Figueira, 2017. "Determinants of the Portuguese GDP stagnation during the 2001-2014 period: an empirical investigation," GEE Papers 0068, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Mar 2017.
    8. A team of the Working Group on Econometric Modelling of the European System of Central Banks, 2012. "Competitiveness and external imbalances within the euro area," Occasional Paper Series 139, European Central Bank.
    9. International Monetary Fund, 2010. "Portugal; Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Portugal," IMF Staff Country Reports 10/18, International Monetary Fund.

    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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